Beta-amyloid peptide, a product of metabolism of amyloid precursor protein (APP), has been implicated in neurodegeneration in Alzheimer~s disease. Exposure of pheochromocytoma 12 (PC12) cells in tissue culture to monomers of beta-amyloid peptide (1-40) increases membrane choline and calcium permeability, measured by patch clamping. The choline effect is ascribed to formation of carriers for choline in the cell membrane. A comparable effect in Alzheimer~s disease could interfere with production and release of the neurotransmitter acetylcholine, deplete energy stores of cholinergic neurons and account for the observed loss of cholinergic neurons. A theoretical model was proposed to explain the relation between beta-amyloid processing and cholinergic vulnerability in Alzheimer~s disease. Exposing cells to fluorescent labeled beta-amyloid peptide (1-40) but not (1-42) showed peptide uptake in the cell membrane. Under the electron microscope, cells treated with beta-amyloid showed distinct ultrastructural cup-like double membrane invaginations in the membrane, and an increased number and size of lysosomes within the cell cytoplasm, consistent with accelerated membrane turnover and membrane localization of the amyloid effect. A Congo red test was developed to determine toxicity of beta-amyloid solutions.